What are takeover bids, the big players in the first half of 2024

At the beginning of this year we are experiencing a great proliferation of takeover bids both in Spain and in the rest of the world. In recent weeks we have witnessed the takeover war for Applus, the Hungarian group DJJ’s preparation of a takeover bid for Talgo and rumours of a possible takeover bid for the pharmaceutical company Grífols, but the trend is generalised. And everything points to these types of operations being the main protagonists for at least the first half of 2024.

What is a takeover bid

A takeover bid is a stock market transaction whereby a person or entity makes an offer to buy all or part of the shares of a company at a specified price.

Advantages

For the acquirer, the objective of a takeover bid is to acquire many shares of a company in a quick and organised manner, at a fixed and more advantageous price. Because a large acquisition of shares through a large number of ordinary stock exchange transactions would cause the market to detect a continuous increase in demand and the price per share would gradually rise.

Shareholders who participate in the offer and sell their shares also benefit because the price offered in a takeover bid is usually 10-20% higher than the market price at the time.

How to make a takeover bid: the prospectus

The entity or person making the takeover bid has to submit a prospectus containing all relevant information:

Target values
Cash or non-cash consideration
Expenditure
Deadlines
Conditions and purpose of the operation
Acceptance and settlement procedures
Etc.

This prospectus of the takeover bid must be approved by the National Securities Market Commission (CNMV) and is freely available for consultation.

Operation

In the event of a takeover bid, the shareholders of the target company can always choose whether or not to participate in the bid.

Partial takeover bids

In the case of takeover bids that do not reach 100% of the shares, three situations may arise:

If the number of acceptances exceeds the minimum required, the shares are sold to the company that made the takeover bid.
In the event that acceptances exceed the maximum requested, the price is prorated.
If they do not reach the minimum, the acquirer can cancel the takeover bid.

Total takeover bids

In the case of takeover bids for 100% of the shares, if at the end of the period 90% or more of the shares have accepted the bid:

The offeror can demand a sell-out from shareholders who have not taken part in the takeover bid.
Any shareholder may require the offeror to buy his shares from him at the offer price (squezze out).

Types of takeover bids

Depending on the attitude of the board of directors of the target company, we can find a hostile takeover bid, when it does not agree with the operation, or a friendly takeover bid, when it is in favour and has reached an agreement with the bidder.

There are also competing takeover bids, where a second bidder makes a bid for securities that are already subject to a takeover bid and the acceptance period has not yet expired.

When is it mandatory to launch a full takeover bid

A takeover bid for 100% of the shares is mandatory in the following cases:

When there is a takeover (acquisition) of more than 30% of a listed company.
If a company decides to delist.
In the case of a capital reduction, because it is a significant amendment to the articles of association.

In all cases it is essential to have legal and financial advice on corporate matters in order to negotiate with all the guarantees.

Por Manuel Urrutia